PROVIDENCE — The state Ethics Commission on Tuesday found probable cause to believe former Warwick City Council President Steven Merolla violated the ethics code by approving $195,000 in payments to an accounting firm whose partners included his campaign treasurer and personal accountant.
Merolla not only voted for the increases of $30,000 and $165,000 in a city contract with the Providence accounting firm YKSM, he also signed five invoices for the firm and hounded administration officials when they balked at making the payments, according to an Ethics Commission investigative report.
Former Warwick Mayor Joseph J. Solomon Jr., who died in May, told the city finance director not to pay the company after learning from a news report about the ties between Merolla and YKSM, the report said.
But Merolla pushed for the payments, writing to the mayor’s chief of staff, William DePasquale Jr., saying, “This is embarrassing. These guys do excellent work and we do not pay them.”
DePasquale responded by saying the City Council would need to increase the amount approved for YKSM. And according to the report, Merolla told DePasquale, “Bill, this is runaround bull**** ... just pay it.”
The Ethics Commission found probable cause to believe that Merolla’s actions violated sections of the ethics code that prohibit public officials from using their office to benefit any “business associate.”
Merolla — who served on the City Council for 21 years before launching an unsuccessful campaign for the state Senate last year — could not be reached on Tuesday. But his lawyer, Christopher S. Gontarz, defended Merolla, saying the current ethics complaint has to be considered in the context of what was going on in Warwick at the time.
Gontarz noted that the city hired YKSM, which has been purchased by the Marcum accounting firm, because the city Fire Department was the focus of scrutiny over allegations of misappropriations involving unused sick time and vacation time.
He said Merolla and other City Council members were concerned about the allegations, and he said YKSM was one of the few firms that had the expertise to look into such matters.
Merolla “did not benefit in any way” from the payments made to YKSM, Gontarz said. “There was nothing nefarious here,” he said.
But Rob Cote, the Warwick resident who filed the ethics complaint against Merolla, said, “It doesn’t take a Harvard MBA to figure out there is something untoward there.”
Cote said that despite all the money paid to YKSM to probe the Fire Department finances, the public has never seen the results of that work.
“As of this date, we have not received one sticky note, not one shred, not one matchbook cover with print on it, showing the results of the money allocated from taxpayer coffers to a private accounting firm to investigate the Fire Department,” he said Tuesday.
The Ethics Commission investigative report said Merolla misses the point in arguing that he received no direct or indirect financial gain from the YKSM payments. “This contention overlooks the fact that a violation under the code can be found where (Merolla) took official actions that resulted in a direct financial benefit to business associates,” the report said.
The report details the various ties between YKSM and Merolla. For example, it noted that Thomas E. Lisi Jr. was a partner in YKSM (and now Marcum) who served as Merolla’s campaign treasurer until 2019, when Merolla appointed his mother as campaign treasurer.
Another YKSM partner, Salvatore Santilli was deputy treasurer of Merolla’s campaign, the report said. Both Merolla and his father had been clients of Santilli’s since the 1990s, and Santilli had done work for Merolla’s law firm, the report said.
When Santilli retired in 2020, Lisi began handling accounting for Merolla, his father, and the law firm, and he plans to continue that work in the future, according to the report.
“The evidence establishes that (Merolla) and YKSM were business associates at all times relevant to YKSM’s contract with the City Council and the allegations in the complaint,” the investigative report states.
The Ethics Commission voted 6-0 to find probable cause on two separate charges that Merolla violated the ethics code through his involvement with the YKSM contract. The next step will be either adjudication or settlement.
Earlier this year, Merolla reached an agreement with the state Board of Elections to pay a $1,000 fine for using nearly $6,000 in campaign funds to pay for advertisements for his law firm in a church bulletin. At the time, he said the violation was inadvertent.
Edward Fitzpatrick can be reached at email@example.com. Follow him on Twitter @FitzProv.